1) Cash, Accounts Payable, and Capital Stock are real accounts and do not get closed at
the end of the period.
2) One negative effect of carrying too much inventory is risk that customers will change
their buying habits.
3) A make-to-order company matches its production schedules to actual customer
orders.
4) Controlling deals with choosing goals and deciding how to achieve them.
5) Minerals removed from the earth are classified as intangible assets.
6) All property, plant, and equipment assets are depreciated over time.
7) For years one through five, a proposed expenditure of $250,000 for a fixed asset with
a 5-year life has expected net income of $40,000, $35,000, $25,000, $25,000, and
$25,000, respectively, and net cash flows of $90,000, $85,000, $75,000, $75,000, and
$75,000, respectively. The cash payback period is 3 years.
8) The difference between the balance in Accounts Receivable and the balance in the
Allowance for Doubtful Accounts is called the net realizable value.
9) Job cost sheets can provide information to managers on unit cost trends, the cost
impact of continuous improvement in the manufacturing process, the cost impact of
materials changes, and the cost impact of direct materials price or direct labor rate
changes over time.
10) It is not necessary for a company to use the same depreciation method for financial
statements and for determining income taxes.
11) List five internal controls that relate directly to payroll.
12) Discuss the following statement:
Operating cycles for all merchandising businesses are the same, with similar profit
margins.
Include an example(s) to illustrate your explanation.
13) Macon Co. acquired drilling rights for $7,500,000. The oil deposit is estimated at
37,500,000 gallons. During the current year, 3,000,000 gallons were drilled. Journalize
the adjusting entry at December 31, 2011 to recognize the depletion expense.
Journal
14) Beginning inventory, purchases and sales data for widgets are as follows:
Complete the inventory cost card assuming the business maintains a perpetual
inventory system and calculates the cost of merchandise sold and ending inventory
using FIFO.
15) Watson Company has the following data:
Show how you would calculate the amount of Direct Materials Used.